ElecDeregulation - CALIFORNIA'S ELECTRICITY MARKET...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CALIFORNIA’S ELECTRICITY MARKET MELTDOWN 1 Paul L. Joskow The lesson to be learned from California's exploding electricity prices and the threat of bankruptcy for its utility companies is not, as some have suggested, that electricity deregulation is inherently a bad idea. California's system blew up when the flaws in the way it implemented reform collided with a run of bad luck. In early 1993, when the California Public Utilities Commission began a comprehensive review of the state's electricity industry - then running under the old framework of regulated utility monopolies - the state was under pressure from industrial consumers to reduce electricity prices that were among the highest in the nation. The high prices were attributed to the utilities' costly nuclear power plants, expensive long-term contracts with independent power suppliers, excess generating capacity, and inefficient regulation. The Commission's vision for reform, articulated in 1994, was built around a new industry structure. The production of electricity from existing generating plants and the entry of new plants would no longer be regulated by the state, and the power they produced would be sold in a new, competitive wholesale market. Homeowners, factories and businesses would have the choice of using the transmission and distribution wires of their old local utility companies for “direct
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern